A significant aspect of electronic transmission control involves monitoring powertrain parameters to determine if the controlled friction elements (clutches, brakes, etc.) of the transmission have properly engaged or disengaged. For example, a proper engagement state of the transmission clutches may be verified by computing the transmission speed ratio (input speed/output speed) and comparing it with the several possible discrete speed ratios of the transmission. As a practical matter, however, only a limited number of parameters can be economically measured, and the monitored data is frequently ambiguous. For example, in certain powertrain configurations where the transmission drives the vehicle wheels through a multi-range transfer case (as in four-wheel-drive applications), the output speed measurement is based on the transfer case output speed instead of the transmission output speed. Since the transfer case provides two different speed ranges, the transmission ratio cannot be unambiguously determined unless the transfer case speed ratio is known. While some transfer cases are equipped with a speed range indicator switch, a failure of the indicator switch is also possible. Accordingly, what is needed is a diagnostic control for enabling reliable determination of proper transmission operation in powertrain configurations of the above type.